Just ahead of the FOMC statement, 10-year Treasury yield is pushing up toward a confrontation with its two-year resistance line, now at 2.06%. If hurdled and sustained, this should trigger upside continuation towards more significant resistance at 2.40%!

Why the rise in yield — which incidentally, has rocketed the ProShares UltraShort 20+ Year Treasury
TBT, -1.57%
from 63.86 to 68.60 in the past week? It certainly can't be explained by the dismal GDP data for the 2012 fourth quarter, which only serves to reinforce the notion that regardless of improving trends in housing, autos, and labor, the U.S. economic "condition" remains relatively sluggish after three years of intense monetary stimulus.

Perhaps the overwhelming dual perceptions of money moving out of bonds into equities, and Mr. Market starting to worry increasingly about inflation, are finally impacting global investors and money flows. In addition, gasoline and crude oil are climbing strongly, while copper is nearing an upside breakout as well, adding more "fuel" to already pent-up fears of accelerating asset inflation in reaction to relentless monetary stimulus by the global central bankers.

If 10-year yield reacts higher to whatever the FOMC has to say later today, then Bernanke & Co. could really have a problem on their hands — a problem not merely confined to sluggish economic growth and anemic jobs creation!

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